Regulations and tribulations
There is a queer set of incentives, usually operating, in the academic duniya. Those who indulge in abstract thought (basically too complicated for the lay reader) do not have much reason to make sense to the lay readers. Their point is to make sense to those who already know much about the issue, otherwise how would one's achievement be evaluated. Those who simplify those abstract thoughts into relevant concepts are paid to do so. Or well may be paid for writing what they believe in. So it is easy to direct criticism at them for being advocates of a particular cause. So? The question is who is truly objective? What is the border between independently writing what you believe in, and being paid by an interested agency to write for what you believe in, anyways?
The immediate context of this was my search for an article on the interaction between business and regulation, which is simple without being simplistic, and has a good marriage of theory and personal experience. The problem (depends on how you see it) is that some of the most clear and insightful articles are written by think-tanks with a clear mandate. The question is how do we parse facts and sound theory from rhetoric from such articles.
The designing of public policies requires a clear understanding of the behaviour of businesses in a regulatory environment. And more importantly, the politics involved. Here is a well-written piece, Bootleggers and Baptists: The Education of a Regulatory Economist that enhances our understanding of it, admittedly an US context but equally valid for India. (Regulation could mean legislation as well.) The questions he tries to answer are these:
Read Bootleggers and Baptists in Retrospect for the author's view after a gap of 16 years after the original article. The subtle lessons are summarised below.
Never lose sight of incentives at the individual level, be it firm or government.
Again, regulations are probably more often performed because we want to do it, not because we must do it.
The sweet irony is this. You can use the same understanding to explain which companies/ businesses will fund advocacy groups to deregulate emerging markets that are highly regulated. We return to our initial question in a different form. Does it matter if someone is paid to tell the truth? Truth according to the advocate, obviously.
PS: Piece inspired by a lunch-conversation between the borders of research and advocacy.
The immediate context of this was my search for an article on the interaction between business and regulation, which is simple without being simplistic, and has a good marriage of theory and personal experience. The problem (depends on how you see it) is that some of the most clear and insightful articles are written by think-tanks with a clear mandate. The question is how do we parse facts and sound theory from rhetoric from such articles.
The designing of public policies requires a clear understanding of the behaviour of businesses in a regulatory environment. And more importantly, the politics involved. Here is a well-written piece, Bootleggers and Baptists: The Education of a Regulatory Economist that enhances our understanding of it, admittedly an US context but equally valid for India. (Regulation could mean legislation as well.) The questions he tries to answer are these:
- When can regulatory reform be achieved?
- Why don't regulators choose efficient measures?
- What factors shift the supply and demand of regulation?
- What does business want from regulations? More importantly, what types of businesses would want this?
- What are the characteristics of interest groups demanding regulations?
Read Bootleggers and Baptists in Retrospect for the author's view after a gap of 16 years after the original article. The subtle lessons are summarised below.
Never lose sight of incentives at the individual level, be it firm or government.
Again, regulations are probably more often performed because we want to do it, not because we must do it.
The sweet irony is this. You can use the same understanding to explain which companies/ businesses will fund advocacy groups to deregulate emerging markets that are highly regulated. We return to our initial question in a different form. Does it matter if someone is paid to tell the truth? Truth according to the advocate, obviously.
PS: Piece inspired by a lunch-conversation between the borders of research and advocacy.
posted by Naveen Mandava at 8:21 PM - Permalink
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